How do Customer-Centric Leaders leave a Legacy?

leaving a legacy through customer centric leadership

This year I have interviewed more than 40 leaders who have been selected on the basis that they are perceived by the people who know them well to be customer-centric. Our consulting partners around the world have been the main source of connection with these leaders.

One of the common themes of these leaders is that they have a sense of purpose that they want to leave a much stronger and sustainable business through the culture they create – a customer-centric culture. Some of these leaders head up multinational businesses in various countries and regions of the world and remain in those countries for only 2 to 3 years before moving to another region. The typical tenure of CEOs in large publicly listed companies is only 3-4 years. So how do they leave a legacy?

The most customer-centric leaders know that they must embed this culture in middle management and up, down and across the business. It is only then that the business will survive constantly changing senior leadership. I have always believed that one of the keys to embedding is a valid measurement of customer culture across the organization. This creates tangibility, employee engagement with customers and targets for improvement. Measurement in tandem with rewards and recognition for customer-centric behavior and performance provides the virtuous cycle for a sustainable customer culture that drives ongoing superior business performance.

That’s why I, with my team, have invested so much personal energy into measuring and benchmarking customer culture behaviors that are the foundation for superior and sustainable business performance in today’s disruptive world.

The MRI tool, developed 10 years ago, now with a rapidly growing database is a key tool that customer-centric leaders can use to fulfill their purpose of embedding customer culture deep in their businesses that can be sustained long after they have left.

What is your leadership legacy?

This is how to become the answer to your customer’s prayers

Pope Francis at general audience

The simple answer is to make sure you know what they are praying for!

We call this customer insight. In other words, what are your customer’s needs? What are they trying to accomplish and how can you help them achieve it?

While you as the leader of your organization might have these answers, can everyone in your organization answer these questions? Really great organizations have clear answers to these questions and are aligned and empowered to deliver the experience customers value. Their leaders are what we call customer-centric leaders.

Is the Pope a customer-centric leader?

My co-author, Linden was surprised recently when he spoke with a CEO of a multinational business this month and asked him who came to mind as a customer-centric leader. He immediately answered: “the Pope”! Linden said: “Tell me more”.

He then went on to tell explain that a customer-centric leader must be prepared to take risks and he or she must go out and meet with customers and spend meaningful time with them questioning and listening. This type of leader must be prepared to be challenged and also to challenge the current status quo and visit customers in the most difficult markets. This person needs to be authentic with customers and employees through an ability to communicate personal experiences that are relevant and create belief in their followers. He said the current Pope does all these things. He travels widely across different national cultures, talks with his “customers”, takes risks particularly with personal safety and is prepared to question current dogma in the Catholic Church. He comes across as an authentic person with those he meets and how he communicates to the world at large. It got me thinking. Can we learn something from the Pope about customer-centric leadership?

This type of leader must be prepared to be challenged and also to challenge the current status quo and visit customers in the most difficult markets. This person needs to be authentic with customers and employees through an ability to communicate personal experiences that are relevant and create belief in their followers.

He said the current Pope does all these things. He travels widely across different national cultures, talks with his “customers”, takes risks particularly with personal safety and is prepared to question current dogma in the Catholic Church. He comes across as an authentic person with those he meets and how he communicates to the world at large.

It got us thinking. Can we learn something from the Pope about customer-centric leadership?

This is how successful companies ride the waves of digital disruption

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The tide of change from disruption is not just one wave, but a set of waves that continue to roll in and disturb the status quo in so many industries. These waves cannot be resisted but must be ridden by companies that want to survive and prosper. This is clearly seen in the retail sector and in services industries such as travel, transport, banking and insurance, health services and energy.

This sea change in business is now eliminating at least two options that so many established companies have relied on to survive.

One is “omission bias” that occurs when leaders worry more about doing something than not doing something. This has a psychological basis where we can see and measure the results of a bad move, but do not measure the costs of a move not made. However, when investments in customer culture and customer experience are not made, we can measure the impact of reduced customer retention and lower customer lifetime value to the business. These omissions to invest are clearly measurable in terms of their business impact.

The other is “loss aversion”. This is a risk averse approach of “playing not to lose” rather than “playing to win”. Psychological experiments in decision-making show that for most people the pain of loss is about double the pleasure of winning. Corporate culture has a direct impact on whether “loss aversion” is the dominant cultural characteristic. In those companies where “failure is an option” and people are empowered to make decisions and learn from their mistakes, then the loss aversion option is much less significant in how decisions are made. As an example, Amazon is continually experimenting and through “mistakes” learning to increase customer satisfaction and create new markets.

Its latest “mistake” occurred when the Amazon Alexa app apparently mistook a conversation by some young girls in Texas for an online order for a doll house and some cookies! I am not sure who made the “mistake” in this instance (you can decide), but there are lessons for Amazon regarding how they enable ordering via the voice activated Alexa AI system.

The most customer-centric leaders I have interviewed are all prepared to take calculated risks – a combination of curiosity of how to do things differently and better for the customer and the use of data and evidence that acts to provide the “calculation” of the risks. This is why we seek to measure the strength of a company’s customer culture because it provides both the quantitative measure of risk and the qualitative feedback from employees that provide many of the answers as to how customer value and experience can be improved.

The MRI is a unique tool to help leaders take calculated risks to ride the next wave of disruptive change, then the next and the next.

This is why playing it safe is the biggest risk for legacy companies

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Making pizzas seems like a simple business. After all its been happening for centuries and it seems like almost anyone can do it. But to make a sustainable business out of it and maintain an appealing brand in today’s competitive world requires a customer centric leadership mindset.

A starting point for Domino’s change from an ailing pizza maker in 2010 to a growing food business was a leadership change. Patrick Doyle became CEO in 2010 after Domino’s had experienced several years of stagnating business and declining share price. Doyle realized that he could only revamp the business if he could lead and create a mindset change in staff – a change from an “omission bias” where people worry more about doing something different than no change and “loss aversion” where the focus is on not losing rather than winning. I remember the great American motivational writer and speaker Zig Ziglar saying “.. the fear of loss is greater than the desire for gain”. Doyle realized that playing it safe was the riskiest course of all and he needed to create a mindset in the business that change is a necessity and a learning mentality in which for staff “failure is an option”.

A Customer-Centric Leadership Mindset was Needed to Transform Domino’s Pizzas

The change in Domino’s strategy came with a big picture view and a realization that they were not only in the pizza-making business but also in the pizza-delivery business and how this fundamentally affected the experience of their customers. This meant becoming just as much a tech company as a pizza company to transform the way customers could order and monitor the status of their order using a Domino’s app. Other apps were created to enable customers to provide feedback and become involved in games making ‘virtual’ pizzas.

Staff needed to be open to customer criticism to help them make better pizzas that customers would love eating as well as keeping them warm enough by the time of delivery. So Domino’s took on board customer views of how bad the pizzas were and suggestions on what to do to improve them.

Customers’ frank views were aired in advertising and social media and created a transparency and honesty that enhanced brand trust. Domino’s used staff in ads to describe how they had changed recipes and ingredients to make better tasting products. The company created a delivery car with one seat and a warming oven for up to 80 pizzas. It modernized its image to create more of a sense of style and a sense of humor. All of these things were needed for success. Here is 4 minute video describing what they did:

But the foundation for creating this change to a more agile, customer-responsive business came from the customer mindset brought by the new leader and embedded in the business in a way that enabled them to change and transform. As one senior leader told me recently it is the focus on the customer and their changing needs that is the motivator for leaders and staff to change!

Domino’s business results prove the point. Today, it is the second-largest pizza chain in the world, with more than 12,500 locations in more than 80 countries, and up from a share price of around $8 in 2010 to one of $215 in June 2017.

Learn more about what a customer centric culture and mindset are by reading our book, the Customer Culture Imperative.

The key reason why Customer Centric Leaders can build billion dollar companies

One word. Empowerment.

As a leader it is not easy to “let go”. I find it a real discipline to delegate and enable others in our business to do it their way and to do what’s right for the customer. So many leaders rely on processes as a security blanket that enables them to feel comfortable with what is happening in their business.

But we can take a lead from Tony Collins, former CEO of Virgin Trains in the UK, who told me:

“I put my trust in people not processes”

Tony presided over the transformation of Virgin Trains from an internal oriented public service mentality (when Virgin took the franchise from British Rail) to a customer service culture with customer satisfaction levels and profitability as benchmarks for the European rail industry. This approach empowers people and teams to make their own decisions and not wait for approvals.

Ilkka Paananen Supercell

Supercell’s Founder wants to be the Least Powerful CEO

Supercell’s CEO, Ilkka Paananen, believes the less leaders control the more powerful their companies. Supercell, a Finnish company, was worth about $10 billion in 2016 from the creation and marketing of games accessed by digital devices. Paananen says he wants to be the least powerful CEO in the world. He believes the best people will make the best teams that will produce the best games. He explains it this way: “What I mean by this is that the fewer decisions I make, the more the teams are making. In a dream scenario that means the team is making all the decisions. A couple of years ago, we were working on something called Smash Land. Everyone in the company loved it, and it was so close to meeting its targets but didn’t quite make them. So the team went to a sauna together, talked it out and took the decision to pull the plug. I was travelling at the time, so they didn’t bother to consult me – they just emailed the company to let them know. That’s just how Supercell should work.”

He was inspired by the Netflix approach to operate like a top sports team. It reminds me of a conversation I had with a former New Zealand All Blacks rugby coach who told me that they coach in the belief that “ better men make better All Blacks”. Players are empowered to make decisions under extreme pressure on the field without consultation with the leaders. This makes them a world beating team that almost always wins close games.

As a CEO of a very successful Telecoms company told me recently, when he and his senior team “got out of the way” and let their teams do what’s best for their customers, his company dramatically increased its customer retention rate and customer satisfaction levels resulting in earlier customer account payment – happy customers pay earlier. This translated directly into sustained revenue and profit growth.

These examples constantly remind me to trust my team and our partners to get on with it and create great experiences for our customers.

Learn more in our award winning book, the Customer Culture Imperative.

How a customer culture has created “The Amazon Effect”: A vision of the Future

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Ever since reading the classic Competing for the Future I realized that a business leader must have one eye on the present and the other on the future. Every organization is running two businesses – today’s business and tomorrow’s business! To build capabilities today for tomorrow’s business requires a cultural capability for agility, change and customer centricity. I call this cultural capability: peripheral vision – the extent to which leadership and staff in the business monitor, understand and respond to trends and changes in the larger environment including technological, economic, social, political, legal and the natural environment (such as climate change). This future oriented cultural capability also leads us to build disciplines around customer and competitor foresight – what will customers’ future needs be and who will be future competitors and where will they be coming from.

The need for organizations to build these cultural capabilities today is demonstrated by what I call the Amazon Effect. Amazon just announced the acquisition of Whole Foods, a natural and organic foods supermarket chain with 465 stores in North America and the UK. What are the implications? With its online technology capability, Amazon now has a bricks and mortar chain that can be leveraged with its delivery capabilities, elevating online selection and ordering of Whole Foods private label products. It will also bring change to the current retail format with new technology like no cash registers – all to add to the ease and convenience for consumers. This will have a huge impact on other supermarkets, food and grocery manufacturers and the entire retail industry.

What would be the impact in the car industry if Apple bought Tesla or in wearable technology if Google purchased Samsung? How is VISA dealing with PayPal and Apple Pay and hotel chains coping with AirBnB? Many of these challenges for established companies are yet to happen – but they will……and soon.

I am thinking about what this means for my own business and what cultural capabilities and strategy we need to build now to ensure its future. What is your Amazon Effect – the thing that would require you to totally reinvent your business? Building cultural disciplines in peripheral vision, customer foresight and competitor foresight will enable you to become prepared to face these challenges, make the changes you need to make, take up future opportunities and run a growing and sustainable business. Without them you will struggle at best, but more likely be consigned to the history books.

Preparing for your future business requires customer-centric leadership that galvanizes all your leaders and staff to build capabilities firmly focused on who your future customers and competitors will be and how the whole organization is geared to adapt and provide ongoing superior value for customers.

Learn more in our award winning book, the Customer Culture Imperative.

Customer Centric Leaders have a Service Focus where Authenticity Trumps Ego

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Lars Bjork, the of CEO Qlik, has built the company with a service focus around a “we” Leadership Style.

My father had a particular view of service. You served your customers, your employees, your family, your community and your shareholders. He would employ people fresh out of jail to give them a second chance. He knew his staff and their families and helped them when they needed help. He knew what his customers wanted and needed and trusted his staff to deliver value. He led his business with integrity and authenticity. He was a highly respected and successful businessman. From his background in retail he told me if you do all of these things right “…the profit will come up through the floor.”

Lars Bjork agrees. He has led Qlik as CEO for the past ten years and has been there from its days as a tiny start-up in Sweden to becoming a world leader in business intelligence software. Qlik was purchased by a private equity firm in 2016 for $3 billion. It now has around 40,000 customers and offices in 26 countries. Bjork says “leadership, for me, is that you serve the team. And the team is the people who work for you.”

How does that operate in practice? Bjork describes it this way.

“I do a lot of town halls and video. People want authenticity, an unscripted sense of ‘this is how it is’. They don’t want to hear packaged BS. They can see that from a mile away. I try to be transparent and share a bit about my private life – because how am I going to learn stuff from people, how are they going to feel comfortable with me, if I don’t share anything?”

He also asks a lot of questions and listens intently to the answers. This has become formalized with a “listening forum”. This occurs where he brings a dozen people together from different sections. He can’t say anything for an hour. They give him feedback, and he just takes it in. He does not push back or dismiss it. This leadership style is one of authenticity and service.

In our current research involving interviews of customer centric leaders I find the most impressive and effective ones are authentic, service focused, and good questioners and listeners. It doesn’t mean they have no ego. They do, but they are essentially team players and do not let their egos dictate decisions. They often do have to make the tough decisions but they do it, like my father, with authenticity and with a “service” mindset.

Learn more about the power of a customer centric culture in our award winning book, the Customer Culture Imperative.